Less Than 2% Inflation?

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The FED claims that inflation is below 2% a year in statements like this: “The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term.”

Wars are associated with inflation. With Iraq in the news, how much inflation in prices has occurred from the time that war began in March 2003? There is BLS data for the 11-year period 3/2003 to 3/2014. Here’s a sample. The inflation rates are annual continuously compounded rates.

16 oz bag of potato chips: From $3.546 to $4.538 (2.24% a year).
16 oz creamy peanut butter: $1.981 to $2.707 (2.84% a year)
16 oz cheddar cheese: $4.049 to 5.579 (2.91% a year)
16 oz white bread: $1.042 to $1.359 (2.41% a year)
16 oz ground chuck: $2.196 to $3.745 (4.85% a year)
16 oz broccoli: $1.199 to $1.784 (3.61% a year)
liter table wine: $6.451 to $10.747 (4.64% a year)
3.785 liters unleaded regular gasoline: $1.748 to $3.532 (6.39% a year)

Another data source:

1 year of college: $10,820 to $19,344 (5.28% a year)

1 megabyte memory storage: large declines per year for many years

Unfortunately, one cannot eat or drink computer memory, wear it, live in it, drive it, use it to heat or cool a room, pay taxes or insurance in it or have a surgical procedure done with it.

8:43 am on June 14, 2014